The Exit Nobody Plans For: Why 70% of Small Businesses Never Sell

Free Agent Podcast with Meg Schmitz – Guest: Zac Jennings, Founder, Southern Exits — Exit Advisory & Business Value Growth

Meg Schmitz: Hello, everyone, and welcome to, or welcome back to, the Free Agent Podcast. My name is Meg Schmitz. I am your lovely host. The discussion here is all about free agency, and taking over Hi, everybody, and welcome to, or welcome back to, the Free Agent Podcast. My name is Meg Schmitz, I am your host. This discussion is all about free agency and taking control over your financial future. The mission of my show is to share inspiring conversations with real people who took the leap into self-employment, business ownership, franchising, sometimes franchising, and freedom. From corporate refugees and executives tired of their desk job, to entrepreneurs and investors looking to share camaraderie and inspiration through their own business journey, my podcast aims to spotlight on real people who stepped into the unknown to control over their destiny and became their own boss. So these conversations are always really interesting, because I never know where they’re going to go. But my guest today is Zach Jennings. He’s down in Charleston, South Carolina, but in the world of virtual, who really cares where you are? It’s just… you’re so convenient and accessible, and we’ve had some great conversations over the last couple of weeks, so I am so excited to have you dive into your own story, and then we’re going to talk about business exits.

Zac: Sounds great.

Meg: Which is top of mind for so many people who own a business and are trying to understand how best to get out. But then, as you’re aware, and I am too, there’s a whole big pack of people who are being told to buy revenue, buy an existing business. like, it’s that easy. So, we’ll get there. What I first want you to talk about, though, is set up for the listener. Zach, you’ve been an entrepreneur for an awful long time, so when did you get the itch, and how did it manifest itself?

Zac: Yeah, yeah, I’ve been an entrepreneur for a number of years, multiple businesses over that time. I grew up in a family that had businesses, so when did I get the itch? I think it was probably as a kid. I just… I’ve always saw myself being on my own, I am one that loves flexibility and freedom, and a lot of times that this entrepreneurship really provides that. It’s a roller coaster, but it provides those options much more than many other avenues out there. So, I got started in consulting. So I had an operations efficiency consulting company to start with, so we would go to really large organizations and help them make it easier to do business overall. There’s a lot that’s up under that, but at a high level, that’s what we would do. To start with. And over the time, I’ve had a number of other businesses. One is a marine accessory company. It’s a product that I patented and took it to market as well. And now, I have Southern Exits, which is, like you said, an exit advisory practice.

Meg: So, when you were doing consulting, I always look at I’m older than you are, and I look at you, you look… you look very young. How old were you when you had a consulting practice?

Zac: Let’s see, I would… it would be… I guess I started it about… 26? 20… 7? Yeah, that sounds right. Yeah.

Meg: So, question for you. Did you… does this word… did this word ever pop into your head when you were young, and… Opening a consulting practice, imposter, because you’re… I talk to a lot of people who want to go into consulting, whatever type it is, and they’re like, you know, I don’t have… I don’t have the right resume, I’m not old enough. Did you have any of that head trash in your head?

Zac: Yeah, it’s there. The question is, is what are you gonna do with it, right? The question is, do you know that you actually have value? that you can add to an organization or not. Did I have to sell around this? Absolutely. I happened to gray earlier than did most, so that helped out, but at the end of the day, I wanted to get down to outcomes and experiences, and that’s where I would lead my conversations. And I find that was what was the most effective. And once we can start building relationships on that, a lot of this goes out the window. And, you know, once you get some initial success, and you can start telling those stories, that helps out a lot. But I feel like everybody has that imposter syndrome. The question is, what are you going to do about it?

Meg: Yeah, I like to strike the word from anybody’s brain. I’m not sure if you and I spoke about it, but… Everybody is.

Zac: I, I, I agree, I mean. We… I think that if you’re not pushing yourself to where you feel a little bit uncomfortable, you’re not pushing yourself hard enough. And you’re getting complacent, honestly. And I think that most people have much, much more to give and offer, the world than what they actually take advantage of.

Meg: I agree. They’re just… I have… my husband and I have had so many people stop by our office over the years with entrepreneurial ideas. Pete and I look at him like, where did that… where did this brilliant thing come from? From such a young… okay, granted, we’re in our 60s, so we’re looking… we’re a long way from retiring, but we’re looking back at some of these people, like, huh! That’s really insightful stuff. And so, understanding the backstory of where it came from, you growing up in a household of entrepreneurs. Or business owners. gave you a lot of that credibility then, and confidence, I would imagine, so that you could step into that role and…

Zac: Yeah, I think so. I mean, my wife, grew up, and her dad was, you know, very successful in his career, and But it was just a house where they didn’t have their own business, right? And so it’s just a different risk level. So when we were having conversations about me going out on my own, that’s one of the pieces that came up, right? There’s this uncomfort of going out on your own. not that she didn’t have confidence in me, but it was just, hey, it is, you know, are we ready for this? Kind of thing. So… but having grown up into it, like you said, right, I understood a little bit more about what that would look like.

Meg: So then, somewhere along the lines, you started… your current company, Southern Exits, and that’s where you and I really had some fired-up conversations about what is going on in the state of Entrepreneurship, business ownership, building it to la- building it to last. But building it to sell.

Zac: Yeah. Yeah.

Meg: So how did you get interested in that space?

Zac: So, I have always, always, always loved founders, entrepreneurs, and business owners, I… I love hearing their stories. I love seeing their passion. I… honestly, I love hearing some of the roller coasters that they have been through, and some of the setbacks. I find it inspiring, encouraging, and motivating to hear some of that. So I’ve always wanted to serve in that market a bit more, and so what I found, though, is that a lot of the issues that large organizations were struggling with, that I was helping out with, is a lot where small business owners are totally neglecting. They’re not even seeing some of these issues of, my company should look a little bit more public, I should have a succession plan, I should diversify my customer base, I do need to have good, clean books, I do, like, all of these things, right? that’s where… I get it. Having built multiple businesses, I get why you got there, but let’s talk about what we need to do to get to our next step.

Meg: Yeah, because everyone I’m talking to right now about exiting I believe needs your services, because they’ve got blinders, or blind spots, where they’re just not taking into account more than EBITDA.

Zac: Fantastic.

Meg: So let’s talk about that, because there are a lot of people coming in who say, oh, I want to buy $2 million of EBITDA, or then the person who’s getting out is not paying attention to that. So, what actually drives multiples, and why is it so much more than just EBITDA?

Zac: Yeah, so to start with, you do happen to have a certain level of cash flow, you know, a certain amount of cash that it can… a business can generate, but Where it really gets interesting is the transferability of that. So what is actually behind driving that cash flow? A lot of times, it’s the owner. So it’s owner dependencies. We all know the deals that have been made over the years, especially when you have some of your first clients that are still the great clients today. And you actually probably are taking a… they’re not really driving too much revenue for you, because you made compromises to get those first clients, and so on and so forth. no buyer wants that kind of stuff. They want to know, without a shadow of a doubt, that whatever I take this over, I’m not going to have to deal with those kind of clients. They want to know that this is going to continue to cash flow, just like you say it is, and just like it is today. whenever you are gone. They want to make sure that customers aren’t leaving because you’re gone. They want to make sure that key personnel is not leaving because you’re gone. They want to make sure that there is an actual system in place That is repeatable by anyone.

Meg: And so that’s really interesting, your initial comments. There are a lot of businesses that get started with the bartering system.

Zac: Yep.

Meg: And you… that’s not bookable.

Zac: It’s not. And, and, and the truth is, is… when you’re first getting started, I get it, you know, you’re trying to make things work. But what you have to understand is that as you grow and scale your business. you have to change your systems. You have to change… it’s no different than the different advisors you may have around you. What worked to start with is going to be wildly different for a startup company than it is for a company that’s pushing 10, 20 million dollars in revenue. Those are two different companies, and the people that you meet around you are really, really different, and you have to recognize when to make the jump to the next level of advisory.

Meg: Which I’m imagining a lot of people don’t recognize.

Zac: They don’t. They don’t.

Meg: from what… the people I’m talking to who are business brokers. And lawyers are telling me that Yeah, there’s a knowledge gap, there’s an awareness gap. of still having blinders on and saying, we’re fine, we’re fine, we’re fine. Great, we grew 3% last year. What do you mean we’re not growing?

Zac: Yeah, yeah, I, I think that you, you… It’s okay to have friends that help you out, but at some point, you know, your buddy from college or wherever that’s helping you out, maybe an attorney that you’re good friends with. you have to move past that. You know, sometimes they are of the caliber you need, but you have to move past that in order to move into the next state. And honestly, I think a lot of times those can be… not just the attorneys, but a lot of that can be limiting your growth. When you start to really start looking at the right metrics that actually drive the company. And start shedding all the other fat that’s in the organization, and getting to actionable pieces that actually move the needle, that’s where growth takes place.

Meg: And so this really hits at the heart of the matter for me. My husband and I own a business. He started it. He founded it. It’s been in operation for more than 20 years. I think we’re coming up on 25. And what you’re talking about is exactly what I see in this company. We’ve been… he and I have been discussing this for the last 12 years. How to move the needle. Well, this is a culture and leadership issue.

Zac: Yes.

Meg: And so… we don’t want to sell, but we’re looking to acquire similar types of businesses, but there isn’t anybody out there who’s operating as well as we are. So we can’t roll up additional businesses to make ourselves bigger, and we’ve got leadership that doesn’t want to grow. Not that it’s your problem, golf, but…

Zac: It’s a very tough spot to be, but I find that having the right leadership team that’s instilling the right culture, with an aligned objective. is, is, is huge. It’s huge.

Meg: I got asked yesterday, well, Meg, if you and Pete own the business, why… why don’t you do something about it? Well, because we own 7 businesses, when you don’t have direct daily governance and oversight and involvement with those people. then it makes it really challenging to impact that kind of change. But I see so clearly what you’re talking about, just within… our own portfolio of companies. Is there… is there a point, like, a tipping point at which you see owners saying, okay, I gotta get out? And… and in that tipping point is… Is there any kind of typical mistake that they’re making when they say, It’s time.

Zac: That’s the first mistake. Is that… you are waiting until it’s time, like, I’ve got… I’ve got to sell, I’ve got to get, like, I’ve got to move, step back, I’ve got to move.

Meg: No.

Zac: this, right? If you’re waiting until then, There is no exit strategy. It is… Let’s de-risk as much as we can.

Meg: So it’s more of a desperation play. Leads them to a lesser outcome.

Zac: Yeah. Yeah, so a lot of times what I see, and this is what I really am high on educating business owners about, is that I get it. You don’t want to have a conversation about exiting because you don’t know what’s next. I get that part. But, let’s talk about the risks that you’re putting on the table of… you finally get burnout, you finally admit to yourself that you burn out, that you need out, you need to change, it’s maybe impacting your health, your family, your marriage, it’s impacting all kinds of different areas of your life. That is not the time to make major decisions that go on with exiting. That’s not the time. You want to make sure you have a plan way before that. You don’t want a pilot making their landing plan When they’re in air. You want them to have already figured out where we’re going to land, how we’re going to land, is it going to be clear? We don’t want to do it whenever they’re going, you know, starting to descend. So, that’s where I find the first mistake is, is that we’re just waiting until there’s some kind of a catalyst like that, as opposed to, thinking and planning ahead of time. And there’s a couple options, a couple things that come out with this, is one, when you start doing exit planning early. One is you’re gonna grow. You’re gonna grow your business quickly. start talking about enterprise value, as opposed to some other metric. And we’re going to actually talk about how do we grow the business The other thing is that you’re going to have more cash flow, because we are going to push more money to the bottom line on things, right? So, what would you do with an extra 30% of profitability? There’s a lot you could probably do with that, right? Yeah. And then the last piece is you’re going to have optionality. So it’s not going to be, I’ll take the deal that comes, the only deal I get. It’s, this is how I want to exit, this is my price, and this is my terms. This is what I’m willing to accept. Now I… there are some limits on that, of kind of just what the market, you know, will… will demand, and can command in that, but I… I have seen over and over and over again the exit that has been thought through way ahead of time is wildly different than the exit that is, you know, because it’s some kind of event of, I’m burnt out, I’m tired, I can’t take it anymore.

Meg: And so, it strikes me that there’s a pretty big gap between the seller wants to sell here, and the buyer wants to buy here. How… is this more or less how they bridge that gap, is by planning early?

Zac: Yeah. Yeah, that’s a huge part of it, and honestly, what I am seeing is that there are plenty of strategic buyers that want to deploy capital. They want to, for the right deal. For the right deal. They… and that’s a lot of what it is, is giving them… they don’t mind paying the higher price for the right deal. But they’re not going to pay a higher price And then also accept higher levels of risk. They’re not.

Meg: Yeah. So, are there particular line items that are… Higher risk, or that you would point out Well, you’re working more with a seller, right?

Zac: Yep.

Meg: And you’re not a broker.

Zac: Not a broker. Okay. But so, you know, kind of maybe to go where you’re trying to go with this is there are absolutely… so one of the things we do is we go in and we do a full assessment of the business, end-to-end. of how are we operating, but I think one of the unique pieces of this is this is just not a… let me put a score on this for how good you’re operating, good or bad. This is how good are you operating as a buyer would see you.

Meg: Yeah.

Zac: So it’s putting that lens on it, which is a different lens. It’s the same thing of… for your taxes, you want to get your tax bill as low as possible, I get it. But that’s not your real numbers, right? We have to adjust those to get back to real numbers, as opposed to the tax numbers, kind of.

Meg: Yeah. So, talking to… talking to some people recently who are in business brokerage, they’re… both of them are men, they were telling me just how awful the market is right now, because so few… Business owners are prepared to sell. They haven’t gone through this exercise. What tips would you give to a seller That they should focus on, that my people who are buyers, who have the money, what are those line items that they should be paying attention to when they’re… when an owner is looking to sell?

Zac: Yeah, so I say, to start with, pick a vacation. In the busiest part of your day. Busiest part of your season. Go take a vacation. Right? If you can’t do that, You’re not ready.

Meg: That’s kind of discounts you.

Zac: Majorly. Right? That’s one area, is that owner dependency. The other one is customer concentration. Yes, you’re doing, you know, $10 million in revenue. But that comes from 20% of your customer’s base.

Meg: Right?

Zac: And then you’ve got all the other customers, and they’re not doing that much. That’s a high risk, because you lose a couple key accounts, and all of a sudden, this business is almost worthless. It looks good to start with, but when you start peeling players back, a buyer’s been a really good nervous about this. The other one is, do we have actual processes? And I’m a big fan of SOPs and all that, but what I have found is that there’s a difference in SOPs that are written down and set up on the shelf or in the drive. And SOPs that are actually part of the culture. Right? So they’re actually enacted, so you can go talk to Jane in customer service, and, hey, what’s the process here? And verbatim, this is what the process is. You can go talk to Bill over there, too. Like, it’s not just… knowledge is shared. very, very well. Whereas opposed to knowledge being captured all up into a few select people.

Meg: Question for you. Are you finding that When a seller actually sells the… the… the employee’s Remain with the company?

Zac: It’s a mix. That’s part of what we look at, because that is a huge, huge aspect of it. And I strongly encourage, if you have key persons, that you get some agreements, you get something in place to protect that. I also strongly encourage that you diversify that knowledge base, which kind of goes back to what I was saying, is if you’ve got one or two rainmakers in the organization. And they’re gonna go with you whenever you leave. That’s a huge, huge risk. That’s a huge, huge risk.

Meg: Well, and I talk to so many people who say, oh, I’ve got selling in mind, but I don’t want anyone to find out.

Zac: Yeah.

Meg: I don’t want my employees, I don’t want my customers to know that this is what I’m gonna do, and that’s a huge risk factor, then. Huge. For the buyer.

Zac: And the way I see it is, let’s go in and put a strategy in place for this. Let’s go in and communicate ahead of time. Let’s go in and make the employees really, really comfortable about this. Let’s, you know, as opposed to, like, this hush-hush, piece to where we know whenever there’s a rumor going around, people will fill it with details. Based off of their own information they have. And a lot of times, as that kind of gets cascaded down, everybody fills in the blanks, it fills in the blanks, and it’s wildly different. to the point where it’s, no, I’m not gonna do this, the owner’s saying this, you know, like, no, I’m not gonna… that’s not what my plan is. So I would say, let’s go in and actually have a strategy, a communication, an actual strategy for that, to make sure people feel comfortable. And, you know, there’s got to be a level of transparency with it.

Meg: So a long time ago, I sold a business. It was my great clips. I had 5 locations, and someone made me an offer I couldn’t refuse, and… So I took it, and it was great. But there were… so some of these aspects of selling that we’re talking about, I proactively new to do, and so that helped me get a higher price point. It helped me settle my employees. They did not like the new owner. Which is not atypical. But he made me a great offer, and I was a bit, at that point, in that I wasn’t desperate to leave it, but I had another opportunity that I wanted to move on to. And so, I should have paid more attention to… a couple of things that I regretted, after the fact. Do you find that other… am I unique in that, or are there other people.

Zac: No, not at all, not at all. The latest study I saw I think it is 75% of owners that sell regret the transaction.

Meg: Oh, the entire thing?

Zac: They regret it for some form. It could be price, it could be terms, it could be… timing, like, they regret it for some reason. Okay. Right? It could be, wow, I didn’t know that owner was going to take it and do that, to where these, these really friends, these employees, which are friends. that have been with you along the way, maybe got a bad deal. I didn’t… I never knew they were gonna do that, right? It could be… I should have never left. I, you know, I should have just pushed through a little bit longer and done some of these changes, and I could have gotten twice to three times what I got. Right, so the price was not right. It could have been… I had to take this deal, I had no other option. You know, my husband or my wife is sick. I didn’t have another option. I didn’t want to sell, right? So it could be a personal piece of it, but I think it’s about 75% regretted in some way. The other part, which I think is really interesting, is that, Whenever they have this transaction, because the business has been so much a part of them, there’s almost kind of this identity crisis in some ways that takes place of… What do I do now? What’s my purpose now? Unless you have something that you’re actually, you know, trying to engage to. You need to have a plan on that personal side as well, of what are you going to do that’s actually going to give you purpose? Because you… you… if you built a substantial business. then you are not just somebody that sits around and does nothing. That is not in your nature and your character, to say, alright, I’m gonna retire and play golf. that’s probably not what’s gonna happen. You’re gonna sit around to play, you know, for a couple weeks, but after that, you’re really gonna be bored, and trying to figure out, like, what do I do? I’m not the one in charge anymore. Nobody’s coming to me for anything anymore, and I don’t know what to do with that.

Meg: Oh my goodness, I see this so clearly, over and over again. Is there… In your estimation, a… period of time that people should come to you and say, I’m 3 years out, I’m 5 years… is there any sort of parameter that you would put on that exit timeframe?

Zac: Yeah, so… I like to start to engage people 3-plus years out. And I try and put this caveat on it, is that it’s going to take you at least a year, probably, once you get… go to market. thereabouts, right? From PM to market to closing. But if you want to actually improve anything, it’s going to take a little bit of time to improve anything. So that’s the reason I, you know, hey, let’s talk about it at least 3 years ahead. That way, you’re not so close to the finish line that it’s… you’re starting to compromise on what you’re actually wanting. But also, we have enough time to make some substantial change. What I do also find is that people that are engaging even earlier, one of the… one of our processes is we go through and make changes, but at the end of these cycles that we have, it’s, do you want to keep growing it, or are you ready to start moving into the sales side? So it’s… a lot of times people think that exit planning means I am ready to sell, but I think people should think about it as I’m ready to create optionality and actually grow my business.

Meg: Yes. Because it sucks when you’re in desperation mode. You’re just not gonna…

Zac: Yeah, you should never make big decisions when you’re in desperation or when you’re going through a hard circumstance, if at all possible.

Meg: If at all possible. Sometimes it happens, and you just… it can’t be…

Zac: Yeah, sometimes you can’t get away from it, but, if you have the ability to… Work on that ahead of time, you absolutely should.

Meg: Yeah, so the… the… Funnest part of your business is what?

Zac: Hmm. I think there’s several aspects of it. One, it’s the clarity people see for their business for the first time. They’re able to… to see their business in a new light. In a light that, now I see how I can grow this. I see where I’m getting held back. I think that is huge to where it’s starting to work, it’s starting to catch on, it’s starting to make sense. I think the other part that I really, really find enjoyable is seeing What kind of legacy do people want to leave? Is it for their community, for the employees? For their kids, their family? Like, what is it that you’re trying to create? And just kind of having some of those conversations, and actually, you know, seeing people have that come to fruition, is so rewarding. It’s… hey. We’re gonna put you into a position where you could have some life-changing kind of a transaction.

Meg: Yeah.

Zac: How do you want to impact that?

Meg: How many people go through your process and say, hey, you know what, I rediscovered, I really love this thing, I don’t want to sell it anymore?

Zac: It happens. It happens, because they have a new light, they have a new, hey, it’s starting to work, it’s starting to click. I was looking at selling because I was getting tired. Because I was… constantly having to work, because I couldn’t take a vacation, I couldn’t have any time with my family, right? And I wanted to see my kids, but now I actually have more time back. I’m able to engage with my family, I’m able to do the things I want. I’m able to take that vacation, even at the busiest time of the year. And everything continues to grow, continues to go, because there’s systems in place that don’t always require me.

Meg: To me, this is so analogous to, palliative and hospice care, which my mother is a hospice nurse, and so I grew up with her sensibility, but the connection that I’m making in my head with business owners is. When you take away the emotional tension. And the stress, and the worry about, what’s this gonna do to my family? What… You can take that and notch it down, then the levels of engagement can go up. On a truer, more honest level. and family can get more involved, or not. I think it depends on the conversation and how it unfolds, but to me, you’re kind of like that palliative care person who’s saying, listen, we’ve got an exit plan here, we can really fine-tune this, and that will provide you so much more satisfaction. than where you are right now. Do you call in other coaches, other resources?

Zac: Yeah, so I think that one of the most important things in this space is to have the right full team around you. And if you have somebody that thinks that they can do everything, you know, a single advisor that thinks that they can handle everything, you really should watch out for that. So I have a network around me, and that’s part of the exit plan that we put together, is like, hey, here is… The attorney we would use. here is, you know, if you don’t have a financial advisor, here’s the financial advisor, and we’ve already engaged with them. This is what they are saying on that personal side, so we can figure out What kind of wealth do you need to accomplish the lifestyle you want, and how does the business impact that? So, absolutely, I highly, highly encourage people to have mentors and advisors that actually meet the state of life and state of business they are in.

Meg: And this reminds me of something so freaking important. If someone is listening to this, and you’re a business owner, and you’re looking to exit, and you have a success… financially rewarding exit. You better be talking to your financial planner about that.

Zac: Absolutely. Absolutely.

Meg: Otherwise…

Zac: What are you gonna do?

Meg: Well, otherwise, you’ve got tax ramifications, you’ve got…

Zac: Yep. Yeah, there are huge ramifications, and you may be looking way up high, you know, for an exit, but you’ve got a tax bill that’s massive. And that’s another reason we engage early, is because there’s things that we can put into play, but if you’re waiting until the last minute, you don’t have time for them actually to work in your favor in that. And, you know, kind of the other part of it, just thinking about business owners, is The statistic is that 80% of business owners, are, sorry. Business owners have 80% of their wealth locked up in their business.

Meg: Hmm.

Zac: Right? So how are you going to be able to harvest that? If you’ve not had a good exit planning strategy in place. And what are you going to do with that once you do unlock it?

Meg: Yeah, and so this is, what people would say, whoa, what a great problem to have, but it’s a really onerous problem.

Zac: It’s… it’s… But to have 80% locked. Right? There’s a potential there. Does not mean you will get it. Yeah. I mean, you’ve generated a potential asset that you maybe cannot even touch. In some ways, I think that would be more discouraging than, you know, hey, I’ve got the opportunity for it, but I can’t get to it.

Meg: Well, and so one of the things that I’m thinking about, going back to a comment you made earlier about some of these entrepreneurs who still have plenty of gas in the tank, they’re mentally engaged. They want to… they’re like… they… they’re like the thoroughbred locked in the barn. They were running this race, and running and running and running, and now, okay, the business is gone. And so that’s where I can just tell you, in the world of franchising. I’ve placed people who are 65 and older in a franchise because they’re not done yet, but they don’t want to start from scratch, and they miss that knock on the door that says, sir, ma’am. Because you were the leader, you were president, CEO of the company. So, along with financial planning your exit, and you brought it up earlier, is to have a, what am I going to do with myself next? Exit.

Zac: I completely agree. I think you… you exit… You don’t exit from something, you need to exit to something.

Meg: Super important for family dynamics. I don’t care whether it’s the… the… I was talking to a gal down in Houston. Her husband is retired, and they’re quite enjoying the fruits of her… of her income and business ownership, and it’s gonna be a game changer. If they don’t exit properly. She’s so invested in the business. She’s not home, she’s not cooking, he’s taking care of that. There’s this whole personal, marital, or relationship dynamic. That’s gonna shift.

Zac: Absolutely, and I would just say to the listeners that don’t discount that piece. Don’t… don’t brush over that. Don’t say, oh, that would be me. I can’t wait to do that. Like, dive into that. what is that actually going to be like for you? Because you’re going to be engaging people around you, family, everyone wildly, wildly different. They’re also going to look at you very, very different. Whether you like it or not, because before, You were the person. You, you, you were the boss. But now, You’re not. And are you gonna be okay with that?

Meg: And most of the time, they’re not.

Zac: Right.

Meg: Unless they plan for it. This is… yes, I was so looking forward to this discussion, because it’s so chunky and chewy, and… so many…

Zac: Yeah, I’ve had a great time.

Meg: The… there’s a psychological or counseling element of this. as well.

Zac: Yes. Yes.

Meg: So how did you sharpen your teeth with that? Was that your upbringing and watching your parents?

Zac: Well, I mean, I, you know, a quick story I’ll say of, A kind of personal story on this is some… so one of the last businesses my parents had was a restaurant, and mom got cancer. And then they shut the business down the next day, right? So, there is absolutely a psychological element. To this, whether you plan for it, Or not. So… And I just find that when you plan ahead, creating some optionality, so that things maybe can continue to run. Or so that you don’t have to just sell it off, whatever you can get. is absolutely huge. But I tell a lot of my clients that story. And it’s not to scare them into things, it is more so of… There are some realities. that you have to look at statistics and look into this, and what I find 9 times out of 10 is when I start asking some of the personal side of the questions, the first answer I get is… usually starts with a stutter, and it goes around in a little bit of a circle. And that it’s some… Wild idea. It’s okay, let’s get that out. But we’re going to circle back into that, but then we’re also going to pressure test it. We’re gonna pressure test it with your spouse, your kids, maybe, your, you know, your best friend. Hey, do you, do you see Meg doing this? Does that… does that seem like Meg? No, I would never do that. Okay. Right? So a lot of it is allowing them to slowly kind of get this information out. Because… but they don’t want to talk about it, because they’re afraid of… of where they’re at today. is gonna be different, just going to say different, are not as good as where they will be if they exit. But what does that look like? They’re afraid of that transaction. And I would say, just as much as I suspect that most people spend a good bit of time planning to start a business. You, you can’t… Once you have something that’s large and a substantial business. How much more time do you think you should plan to exit a business?

Meg: The, the rainbow with the pot of gold… That’s why people plan to start a business, and so many of them never actually get off the ground and operational, because there’s… there are flaws to it. So, giving a lot of credit to anybody who Either started a business or was fortunate enough to buy a business that then grew. That… these exits don’t happen with the same frequency that I… I know influencers are out there saying, buy revenue, don’t start from scratch, buy somebody out. But it’s… it’s… I don’t know if you’ve got any statistics on that, the number of businesses in the United States that are actually transactionable, worth paying for. It’s… Not as high as what people would.

Zac: it’s not… it’s nowhere near. I think that… 70% of businesses that go to market do not sell. Small businesses?

Meg: Hmm. 7-0?

Zac: 7-0.

Meg: Whoa.

Zac: small businesses, right? So, just keep that more Main Street kind of statistics. But, Substantial amount of number… a substantial amount of businesses.

Meg: So that pushes, then, all these people who have private equity, or… I was talking to a gentleman out in New York recently, he’s got… He’s been pre-approved for $5 million, and so he’s been scouring, and we’ve been talking for months now. He can’t find what he’s looking for, but it seems to me what Michael’s biggest problem is Is that he’s bidding against bigger private equity firms that can afford to make a mistake, if you will. They can… they know… they also know what questions to ask. And so it seems like there is a funnel here where more of the real money is going to compete against each other for that 30% of businesses that are viable, and is it anything like the recent housing market, where companies are… some companies are selling for more than.

Zac: Oh, yeah.

Meg: You… because the competition?

Zac: Yeah, I, I… They… private equity has a playbook, and they need an organization or a business to run their playbook. They need it. They have capital to deploy. But if your business does not fit the play that they’re calling, you’re out. But they want to run their play. They are ready to run their play on your business if it looks right.

Meg: Well, it’s certainly a skewed… perception. in, in the world of social media and LinkedIn and buy revenue, buy revenue. I’ve interviewed so many people for this podcast, talking about, it’s not as easy as it looks, there just aren’t that many opportunities out there that are really… worth paying. Real money?

Zac: I agree. I agree. I think that… Yes, by revenue is good. for the right deal. But if you’ve got the right deal, you’ve got a lot of other buyers that are very interested in it, too. Yeah. So…

Meg: I could keep going on and on.

Zac: asking you questions.

Meg: Normally, we record and put out content that’s about 45 minutes long. All this means, Zach, is that you and I need to keep working together and have you back on so that I can keep asking you more questions, because my brain is full of different angles with this. So, for today, thank you so much for making the time to have this initial conversation, and then we’ll just make your repeat guests, because there’s so much good stuff that you see in real life. That is pertinent to what my people are asking. And then they go and get disappointed and dejected and delayed because it’s so hard to find the right deal. So, I just would like to keep this conversation open, and we’ll do it again.

Zac: Sounds great. Looking forward to it.

Meg: Well, thank you again so much for joining me today.

Zac: Thanks, Mac.